"We are pleased to announce that the full SDK for Android 3.0 is now available to developers. The APIs are final, and you can now develop apps targeting this new platform and publish them to Android Market. The new API level is 11. For an overview of the new user and developer features, see the Android 3.0 Platform Highlights. Together with the new platform, we are releasing updates to our SDK Tools (r10) and ADT Plugin for Eclipse (10.0.0)."

Notice how it's always non-developers saying "omg the Android fragmentation makes it super-duper hard for developers to create apps for Android," while any developer will generally tell you there's really no problem.

Sure I test my Android apps on multiple versions, but I do the same for my iPhone apps. Nothing can really go wrong if you just pick a minimum version you want to support and make sure you only use features supported in that version.